Catherine was born on 13 April 1519 in Florence, Republic of Florence, the only child of Lorenzo de' Medici, Duke of Urbino, and his wife, Madeleine de la Tour d'Auvergne, the Countess of Boulogne. The young couple had been married the year before at Amboise as part of the alliance between King Francis I of France and Lorenzo's uncle Pope Leo X against the Holy Roman Emperor Maximilian I. According to a contemporary chronicler, when Catherine was born, her parents were "as pleased as if it had been a boy".[9]

Within a month of Catherine's birth, both her parents were dead: Madeleine died on 28 April of puerperal fever or plague, and Lorenzo died on 4 May,[10] his title over Urbino reverting to Francesco Maria I della Rovere. King Francis wanted Catherine to be raised at the French court, but Pope Leo had other plans for her.[10]

Catherine was first cared for by her paternal grandmother, Alfonsina Orsini (wife of Piero de' Medici). After Alfonsina's death in 1520, Catherine joined her cousins and was raised by her aunt, Clarice Strozzi. The death of Pope Leo in 1521 interrupted Medici power briefly, until Cardinal Giulio de' Medici was elected Pope Clement VII in 1523. Clement housed Catherine in the Palazzo Medici Riccardi in Florence, where she lived in state. The Florentine people called her duchessina ("the little duchess"), in deference to her unrecognised claim to the Duchy of Urbino.[11][12]